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Posted on Fri. Nov. 20, 2009 - 10:40 am EDT Bookmark and Share Subscribe RSS   E-mail

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General Growth, lenders agree on debt rework
Glenbrook's owner said some malls could exit bankruptcy early.
By Alex Veiga
of The Associated Press

LOS ANGELES — Mall operator General Growth Properties Inc., which filed the largest U.S. real estate bankruptcy case in history earlier this year, said Thursday its lenders have agreed to restructure some $8.9 billion in shopping mall mortgage loans.

The agreements, which cover loans on more than 70 malls, could enable some of the shopping centers to exit bankruptcy before the end of this year, the company said.

Thomas Nolan Jr., General Growth's president and chief operating officer, said he hoped the deals would lay the groundwork for restructuring another $6 billion in mortgage loans on other shopping malls.

General Growth is “hopeful that our other secured mortgage lenders will work with us to reach agreements quickly,” he said in a statement.

The company, which is based in Chicago, is the second-largest mall operator in the nation and owns or manages more than 200 malls, including Fort Wayne's Glenbrook Square.

The real estate investment trust and about 166 regional shopping centers and subsidiaries filed for Chapter 11 protection in April.

At the time, it reported $27 billion in debt, making it the largest U.S. real estate bankruptcy case in history. The company racked up the debt in an aggressive expansion during the height of the real estate boom and was unable to service it when credit markets dried up during last year's financial crisis.

The lenders agreed to extend the due dates on the loans to between 2014 and 2018. In return, they will get back what they were owed, plus interest and other bankruptcy-related costs.

In addition, General Growth will be held to stricter oversight on its loans.

The agreements must be approved by the bankruptcy court.

Shares of General Growth added 97 cents to $6.79 in trading Thursday.

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